Weakening the safety net: Local authorities now responsible for emergency support

The government has made significant changes to the Social Fund, which provided a safety net for families and individuals in need of emergency support.

In April, two big components of the Social Fund – Crisis Loans and Community Care Grants – were abolished. The idea was these funds would be replaced by new local welfare assistance schemes. (You can use our map to find more information about your local support.)

Our new report, Nowhere to Turn? Changes to emergency support (press release, full report) examines these new schemes and the funding provided for them, and reveals that many individuals and families in need may no longer be able to access this support.

Dedicated funding has been nearly halved for local schemes

Crisis Loans and Community Care Grants provided crucial support for vulnerable families and individuals.

Crisis Loans were interest-free loans to help people in an emergency with short term needs. For example, if a father had to pay to travel to emergency hospital visits and had no money left to feed his son, he could qualify for a Crisis Loan.

Community Care Grants provided support for individuals or families facing exceptional pressures to re-integrate or remain in their community, for example a child leaving care needing a grant for furniture for their new home.

Crucially, the funding for local schemes has been nearly halved (46%) by a cut of £151 million since 2010 on equivalent expenditure.

At a time of increasingly squeezed local authority budgets, the restriction in funding for these vital schemes has made it extremely difficult for local authorities to provide effective local welfare assistance schemes and to support those in need.

Crisis Loans were usually recovered through direct deductions from claimants’ benefit payments. The funds reclaimed from Crisis Loans were significant, with £148 million recovered in 2011/12.

Almost two-thirds of local authorities no longer provide loans through their schemes. This means that only a third of schemes will have any way of recovering funds.

We’re concerned that without loan repayments in the system, the already finite funds available for the local schemes will diminish sooner and not be replenished.

Big concerns

Another major change in the move from national provision to local schemes is that while Crisis Loans and Community Care Grants provided cash assistance, 80% of local schemes provide only in-kind support, usually in the form of second-hand goods or furniture, food vouchers, pre-paid cards and payments direct to suppliers.

This kind of support is restrictive, inflexible and can be stigmatising. For a family with small children and no money for food, a pre-paid card will not help them pay the bus fare across town to get to the specified supermarket to use their card.

In addition, some schemes have considerably stricter eligibility criteria than Crisis Loans or Community Care Grants had. A number of schemes restrict entitlement to support to only those on out-of-work benefits, so in these areas low income working families who were previously able to access support when desperately in need through Crisis Loans will be denied.

In some areas, schemes are restricted to only those aged 18 and over, while Community Care Grants were, for example, provided to 16 and 17-year-old children leaving care to help them with the costs of setting up home independently. In other areas, people will be expected to rely on family or even friends restricting their access to support from their local scheme.

Understanding local authorities’ financial strain

We understand the significant pressures that local authorities are under to meet increasing demands and needs with ever tighter budgets. We want to work with local authorities to ensure the new local welfare assistance schemes provide the most effective emergency and community support for families and individuals in need.

The shift from national loan and grant provision to local welfare schemes can be seen as symbol of the government’s localising agenda in action. However, devolving new responsibilities to local authorities should not be done without proper funding and support from central government.

We call on the government to make no further reductions and to ring-fence the funding for the local welfare assistance schemes to prevent vulnerable families, individuals and children from paying the price for these changes.